ACCC approves outdoor mega-mergers

The Australian Competition and Consumer Commission (ACCC) has given its approval for both the oOh!media (oOh!) acquisition of Adshel, and JCDecaux purchase of APN Outdoor (APN).

Following the completion of the mergers, the four largest players in outdoor advertising will become two. Unlike the proposed oOh! APN merger last year, which the ACCC rejected, the new mergers are between companies who are not in direct competition, according to Rod Sims, chairman, ACCC.

Sims says, “These transactions are between businesses that operate for the most part in complementary segments of out-of-home advertising. This is different to the proposed tie-up between oOh! and APN. The respective merger companies rarely compete head-to-head.”

As both JCDecaux and Adshel conduct most of their business in street furniture, with oOh!, APN primarily in billboards, airports, and retail, the ACCC is satisfied the mergers will not lessen competition.

Sims notes, “Some market participants expressed some concerns, in particular about the possible anticompetitive bundling of different out-of-home categories. However the major media agencies and large advertisers did not generally express strong concerns, and the ACCC considers that bundling is unlikely to have a significant impact on competition.

“The merged companies will continue to compete with each other and with other out-of-home advertising providers. We consider that the options for advertisers and site owners will not change significantly and so neither of the proposed deals is likely to substantially lessen competition.”

APN also released its HY financial results today, in which revenue grew by four per cent from the previous corresponding period (pcp), from $162.3m to $168.4m, and the split between digital and print narrowed. Digital revenue now sits at 42 per cent of the total, from 37 per cent in the pcp. APN is the only major player of the four that still generates most of its revenue from print.

Speaking on the approval, James Warburton, CEO, APN, notes, “This means one of the key conditions to the attractive acquisition of APN at a total cash consideration of $6.70 a share has now been cleared. We expect FIRB and OIO approval to follow ahead of a shareholder vote in October and implementation before the end of the year.”

The FIRB, or Foreign Investment Review Board, needs to approve the JCDecaux/APN merger as the former is based in France, while the OIO, the Overseas Investment Office, is the equivalent New Zealand body.

As both Adshel and oOh! are Australian companies, they are immediately starting the merger process.

Brendon Cook, CEO, oOh!, says, “For oOh!media, the acquisition of Adshel will add a missing piece to our diverse out-of-home portfolio, by adding a national street furniture and transit offering. Adshel is an excellent business with great people and provides a massive audience reach through what we see as a great street furniture offering, plus its rail network in Sydney and Melbourne delivers the CBD audience, an area we know has real value to advertisers.

“Through this acquisition, we will deliver better service to our advertisers and at the same time fast track innovation in our product offering therefore providing us with exciting opportunities for the business and its growth.

“The digitisation opportunity in the Adshel business is expected to provide significant avenue for growth beyond what has been achieved to date.”

Here, There & Everywhere (HT&E), the ASX-listed parent company of Adshel, has said the approval is a great result for the broader out of home industry.

Ciaran Davis, CEO, HT&E, says, “Today’s announcement represents the final hurdle following a comprehensive and competitive process that led to a value maximising outcome for shareholders, and the proceeds from the sale will put the business on a strong footing to pursue future plans.”

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